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ESCAPING THEDISABILITY BENEFIT TRAP

Disability policy trends and lessons

from OECD countries

Monika Queisser*

* OECD, Social Policy Division Directorate for Employment, Labour and Social Affairs

National Disability Council Copenhagen, Denmark, 7 September 2005.

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Outline of the presentation

Disability policy is becoming a key issue for economic, social and employment analysis

Empirical evidence across the OECD: Understanding the problems

A comparative policy analysis: In most OECD countries, more needs to be done

The OECD’s work on disability issues

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The growing importance of disability policy

Maybe the key unsolved social policy problem

High public spending, but only limited and unsuccessful attempts to change this

Increasingly becoming the “benefit of last resort” in many OECD countries

Key issue in the context of pension reform Key issue in the context of ageing and low

employment rates of older workers Major waste of human resources – people

become healthier but less work-able ?

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HIGH PUBLIC CASH SPENDINGPublic incapacity- and unemployment-related spending in % of GDP, 2001

Source: OECD (2004), Social Expenditure Database, Paris.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Pol

and

Net

herla

nds

Nor

way

Sw

eden

Fin

land

Sw

itzer

land

Cze

ch R

epub

lic

New

Zea

land

Den

mar

k

Luxe

mbo

urg

Hun

gary

Por

tuga

l

Aus

tria

Spa

in

Bel

gium

Uni

ted

Kin

gdom

Aus

tral

ia

Slo

vak

Rep

ublic

Ital

y

Icel

and

Fra

nce

Ger

man

y

Gre

ece

Irel

and

Uni

ted

Sta

tes

Can

ada

Japa

n

Kor

ea

OE

CD

-28

incapacity-related cash spending cash spending on unemployment

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HIGH DISABILITY BENEFIT RECIPIENCYDisability benefit recipients in per cent of the working-age population, 1999

Source: OECD (2003), Transforming Disability into Ability, Paris.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Non-contributory disability benefits

Contributory disability benefits

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RAPID BUT DECLINING GROWTHGrowth in disability benefit recipiency 1980-90 and 1990-99 (percentages)

Source: OECD (2003), Transforming Disability into Ability, Paris.

-60

-40

-20

0

20

40

60

80

100It

aly

Port

ugal

Spai

n

Net

herl

ands

Den

mar

k

Fran

ce

Bel

gium

Swed

en

Nor

way

Aus

tria

Pola

nd

Ger

man

y

Switz

erla

nd

Uni

ted

Stat

es

Can

ada

Uni

ted

Kin

gdom

Aus

tral

ia

OE

CD

-15

1980-90 1990-99

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LOW OUTFLOW FROM BENEFITSAnnual rates of outflow from disability benefits (percentages)

Source: OECD (2003), Transforming Disability into Ability, Paris.

0

2

4

6

8

10

1995 1999

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MANY APPLICANTS ARE REJECTEDRejected benefit applicants and successful appeals (percentages)

Source: OECD (2003), Transforming Disability into Ability, Paris.

0

20

40

60

80

100

Rejections Successful appeals

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PUZZLING AGE VARIANCE ACROSS COUNTRIESAge-specific disability benefit recipiency rates (per 1000 of population), 1999

Source: OECD (2003), Transforming Disability into Ability, Paris.

0

25

50

75

100

20-34 35-44

0

100

200

300

400

45-54 55-59 60-64

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Different countries seem to havedifferent problems

Countries with disability benefit as the benefit of last resort (e.g. UK, US)

Countries with disability benefit as another early retirement pathway (e.g. Austria, Germany, Portugal)

Countries with disability benefit as the benefit of last resort and as early retirement pathway (e.g. Netherlands, Norway)

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DISABILITY POLICY TYPOLOGY 2000Source: OECD (2003), Transforming Disability into Ability, Paris

AUSAUT

BELCAN

DNK

FRA

DEU

ITA

KOR

NOR

POL

PRT

ESP

SWE

CHE

TUR

GBR

USA

MEX

NLD

OECD

0.0

12.5

25.0

37.5

50.0

0.0 12.5 25.0 37.5 50.0

Compensation

Inte

grat

ion

Chart 8. DISABILITY POLICY TYPOLOGY

(situation in 1985 versus 2000)

0.0

8.3

16.7

25.0

33.3

41.7

50.0

0.0 8.3 16.7 25.0 33.3 41.7 50.0

compensation component (10 sub-components)

inte

grat

ion

com

pon

ent

(10

sub

-com

pon

ents

)

Compensationpolicy

Weakintermediate

policy

Strongintermediate

policy

Integrationpolicy

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Why disability policy reform is needed in OECD countries

Other social protection systems are gradually maturing

Demands at work, especially psychological demands, continue to increase

Continued ageing of the population of working-age

Too little focus on avoiding IB/SB inflow Large age-bias in rehabilitation and

vocational training

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How to escape?

Transform the disability benefit schemeinto a flexible labour market programme

Assess needs and, if necessary, intervene earlier: Avoid IB benefit inflow through job search, training, rehabilitation and prevention

Disentangle eligibility for support from work ability and work status: Make cash benefits a flexible (in-work) tool that covers extra costs and the labour market disadvantage

KEY ELEMENTS IN THIS:

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Break the link from temporary sickness to permanent disability

Implement a mutual obligations approach Provide individualised, tailor-made pre-

and post-placement support, thereby emphasising abilities and opportunities

Integrate employers into the process, and design proper financial incentives for them

Monitor outcomes carefully

KEY ELEMENTS IN THIS (continued):

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The situation in Denmark in international comparison

Strong reduction of disability inflows since 1990s despite comparatively high benefit levels

High but declining costs of disability benefits but high unemployment expenditures

Strong emphasis on integration policy Importance of flexjobs Good financial incentives in administrative structure Decentralisation and client-friendly one-stop-shops Suppression of partial disability benefits

Denmark could provide interesting lessons for other OECD countries

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OECD work on disability policy in member countries

Publication of Transforming Disability into Ability in 2003 (covering 20 countries)

Start of country reviews of disability policy First round: Norway, Poland, Switzerland Second round: Australia, UK, Spain Possibly: Finland, Luxembourg, France, NL,

US and Denmark ? Update of comparative country data